Austrian Experts Warn Against Fuel Tax Rise

by Ulrika Lomas, Tax-News.com, Brussels

20 January 2012

The government’s decision to increase fuel tax (Mineralölsteuer – MöSt) in Austria from January 1, 2011, has not only proven to be very expensive for domestic taxpayers, but has also failed to generate the anticipated additional fiscal revenues for the state, according to a recent study conducted by the institute of transport and logistics at the Vienna University of Economics (WU).

At the beginning of last year, the fuel tax levied on diesel was increased by 5 cents a litre and on petrol by 4 cents a litre. Although the government expected the fuel tax rise to yield additional fiscal income of around EUR400m (USD512m), the findings of the study revealed actual additional revenues of just EUR100m in 2011.

According to the WU study, the shortfall in 2011 fiscal revenues was due to a decline in tourist fuel consumption, a direct result of the fuel price increase, with tourist traffic simply electing not to purchase fuel while travelling through Austria.

Underscoring the additional burden on domestic taxpayers and the decline in tourist fuel consumption arising as a result of the significant fuel cost increase, Alexander Klacska at the transport department of the Austrian Economic Chambers (WKÖ) warned the government against any plans to further increase fuel tax in Austria.

Klacska argued that a further tax rise of 5 cents a litre would serve to exacerbate the situation and to force Austrians to purchase fuel abroad. Klacska explained that the price of diesel in neighbouring European Union countries is cheaper than in Austria, with the exception of Italy.

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